National Employer Initiative on

Specialty Drugs & Biopharma

Employer Focused, Employer Driven

Specialty Drug Environment: The Basics

Advances in biotechnology have led to the development of new medical therapies for a variety of diseases. Among these advances is a classification of medications called specialty drugs, which includes biologics.

The PEW Charitable Trusts defines specialty drugs as medications with high costs for a course of treatment or a year of therapy. Some health plans also categorize drugs as specialty if they are novel therapies; require special handling, monitoring or administration; or are used to treat rare conditions. In general, elevated costs are a distinguishing characteristic of specialty drugs. A recent survey found that 85% of health plans consider high cost a determining factor in identifying specialty drugs. Medicare’s definition of specialty drugs is also based on price. Pharmaceuticals costing $600 or more per month are considered specialty.

biologic is manufactured in a living system such as a microorganism, or plant or animal cells. Most biologics are very large, complex molecules or mixtures of molecules. By contrast, a non-biologic drug is typically manufactured through chemical synthesis, which means that it is made by combining specific chemical ingredients in an ordered process.  Non-biologic, or chemical drugs, tend to be much smaller, simpler molecules. Most biologic drugs are injected or infused in the patient. In the last several years, a number of drugs have come to market that are not considered biologics and yet they are classified as specialty drugs because they can be taken in oral form and do not require special handling or storage.

Previously, specialty drugs were developed to treat complex chronic, life-threatening and rare medical conditions that previously had no therapeutic options available.  Today, an increasing number of these drugs focus on chronic diseases, especially for patients who have not seen improvement in their condition on conventional drugs. Administrative methods can include infustion at a clinician’s office, oral formulation, self-injected or inhaled.